HRS § 663-10 Liens Are Insurers’ Exclusive Remedy After a Tort Class Settlement—No Intervention or “Non-Claimant” Subrogation

I. Introduction

This decision arises from the catastrophic Lahaina fire (and same-day Kula and Olinda fires) on August 8, 2023. Numerous injured persons pursued individual tort actions (“Individual Plaintiffs”), while separate class actions—later consolidated and refiled in state court—proceeded on behalf of persons with personal injury, property damage, business losses, and related harms (“Class Plaintiffs”). Defendants included Hawaiian Electric Company, Kamehameha Schools, the State of Hawaiʻi, the County of Maui, and others.

Court-ordered mediation produced an August 2024 “global settlement” term sheet and, on November 1, 2024, complementary settlement agreements: an Individual Settlement Agreement and a Class Settlement Agreement. The aggregate global settlement amount was $4.037 billion; the class settlement fund was set at $135 million (with allocation details to follow through the class settlement plan).

The issue here is whether Class Plaintiffs’ insurers—acting as “Subrogating Insurers”—may intervene in the class settlement proceedings under Hawaiʻi Rules of Civil Procedure (“HRCP”) Rule 24. The insurers asserted that the settlement would extinguish their equitable subrogation rights, particularly where some class members might not submit claims against the settlement fund (leaving, in insurers’ view, “nothing” to which a statutory lien could attach).

II. Summary of the Opinion

III. Analysis

A. The Precedents Cited—and How They Drove the Result

1. In re Maui Fire Cases (Maui Fires)

The court treated In re Maui Fire Cases (Maui Fires), 155 Hawaiʻi 409, 565 P.3d 754 (2025), as the controlling foundation: once insureds settle with tortfeasors, the “lien-claim process established by HRS § 663-10 provides the exclusive remedy for an insurer to recover for claims paid to an insured.”

Burnes does two important things with Maui Fires:

• Extends the exclusivity holding to tort class actions: because a class action “premised on a tort claim is a civil action in tort,” and HRS § 663-10 applies to “any civil action in tort,” class settlements are not exempt.
• Rejects a “non-claimant” subrogation workaround: the court held that class members’ entitlement to recover from the settlement fund constitutes “recovery from the tortfeasor” for equitable-subrogation purposes, even if a particular class member later does not file a claim form.

The decision also relies on Maui Fires to dispose of due process arguments: Maui Fires already held insurers are not prejudiced when policyholders settle and extinguish subrogation rights without insurer consent, and it did not find the HRS § 663-10 framework constitutionally defective.

2. Intervention doctrine: Ing v. Acceptance Ins. Co. and Baehr v. Miike

The court applied the four-factor test for intervention by right from Ing v. Acceptance Ins. Co., 76 Hawaiʻi 266, 874 P.2d 1091 (1994) (timeliness; protectable interest; impairment; inadequate representation), and reiterated Baehr v. Miike, 80 Hawaiʻi 341, 910 P.2d 112 (1996): failure to satisfy even one factor defeats intervention by right.

Critically, the court treated “protectable interest” as the gatekeeping requirement: with HRS § 663-10 liens as the exclusive remedy after settlement, insurers had no subrogation interest left to protect and therefore could not show impairment.

3. Statutory structure: Yukumoto v. Tawarahara and related legislative-purpose references

The court quoted Yukumoto v. Tawarahara, 140 Hawaiʻi 285, 400 P.3d 486 (2017), for the proposition that the legislature created “a comprehensive structure for addressing liens and subrogation rights” whenever an insured pursues a judgment or settlement from a tortfeasor. This reinforced reading “any civil action in tort” broadly enough to include class actions, and reading “settlement” to include class settlements.

4. Class action purpose: Life of the Land v. Land Use Comm'n of State of Haw. and binding effect cases

To underscore why insurers’ theory would destabilize class settlements, the court invoked Life of the Land v. Land Use Comm'n of State of Haw., 63 Haw. 166, 623 P.2d 431 (1981), describing HRCP Rule 23’s pragmatic objectives: efficiency, economy, and uniformity for similarly situated persons.

It also relied on Rule 23’s binding nature and Hawaiʻi authority that class judgments bind absent members who do not opt out, citing Akau v. Olohana Corp., 65 Haw. 383, 652 P.2d 1130 (1982), and settlement binding principles in Alden v. Kona Palisades, Inc., 3 Haw. App. 47, 641 P.2d 330 (App. 1982). These authorities supported the court’s premise that “passive” class members still “pursue” recovery through class representatives, so insurers cannot recharacterize non-claim submission as “no settlement.”

5. Subrogation’s derivative nature: State Farm Fire & Cas. Co. v. Pac. Rent-All, Inc.

The court emphasized subrogation’s “stepping into the shoes” doctrine via State Farm Fire & Cas. Co. v. Pac. Rent-All, Inc., 90 Hawaiʻi 315, 978 P.2d 753 (1999): insurers have no greater rights than their insureds, and their rights flow from the insureds’ rights. From this, the court reasoned that once the insureds’ tort claims are settled (including via a binding class settlement), the insurers’ derivative subrogation claims are likewise ended—regardless of whether an individual class member later files paperwork to obtain a distribution.

6. Rejecting “competition” and distinguishing workers’ compensation: Park v. City & Cnty. of Honolulu

Insurers argued Maui Fires created a “competition for funds” prerequisite to applying HRS § 663-10, and that when an insured receives nothing (e.g., does not submit a claim), there is no “competition,” so equitable subrogation should revive. The court rejected this as a misreading of Park v. City & Cnty. of Honolulu, 154 Hawaiʻi 1, 543 P.3d 433 (2024), which Maui Fires had distinguished because Park’s underlying claim had been dismissed and there was no settlement/judgment against which a lien could attach.

Burnes clarifies that “competition” was not a new global precondition; rather, the presence of a settlement/judgment is the statutory trigger. Once settled, the lien framework applies; equitable subrogation “has no place.”

7. Economic interest is insufficient: Greene v. United States

The court relied on Greene v. United States, 996 F.2d 973 (9th Cir. 1993), for the principle that an “economic stake” (even if significant) is not, by itself, a legally protectable interest supporting intervention. This defeated insurers’ argument that the settlement fund was inadequate to satisfy liens.

8. Timeliness and prejudice: California Dep't of Toxic Substances Control v. Com. Realty Projects, Inc., Hoopai, and others

For timeliness, the court invoked California Dep't of Toxic Substances Control v. Com. Realty Projects, Inc., 309 F.3d 1113 (9th Cir. 2002): insurers should have moved when they had reason to know settlement might harm their interests—here, when the class settlement was publicized on November 4, 2024.

On prejudice, the court drew from Hawaiʻi intervention cases and related authority, including Hoopai v. Civil Service Comm'n, 106 Hawaiʻi 205, 103 P.3d 365 (2004), and Blackfield Hawaii Corp. v. Travelodge Int'l, Inc., 3 Haw. App. 61, 641 P.2d 981 (App. 1982), to underscore that intervention that injects issues, causes delay, or endangers settlement can be highly prejudicial—especially where a “complex and delicately balanced” settlement is at stake (citing also United States v. State of Oregon, 913 F.2d 576 (9th Cir. 1990)).

9. Adequate representation presumption and its rebuttal: Arakaki v. Cayetano

Although the court ultimately agreed that Class Plaintiffs inadequately represented insurers’ specific objectives (subrogation for non-claimants), it addressed the circuit court’s reliance on Arakaki v. Cayetano, 324 F.3d 1078 (9th Cir. 2003), which recognizes a presumption of adequacy where parties share the same “ultimate objective.” Burnes narrows that logic: both sides may want “more money” in the abstract, but their concrete settlement goals diverged sharply—Class Plaintiffs sought finality and releases; insurers sought to preserve or recreate subrogation paths.

10. Due process in class actions: Patrickson v. Dole Food Co., Inc., Silber v. Mabon, and Phillips Petroleum Co. v. Shutts

The court referenced due-process opt-out principles for absent class members via Patrickson v. Dole Food Co., Inc., 137 Hawaiʻi 217, 368 P.3d 959 (2015), and Ninth Circuit and U.S. Supreme Court authority (Silber v. Mabon, 18 F.3d 1449 (9th Cir. 1994); Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985)). But it held those protections belong to class members—not to excluded insurers, even if the settlement’s administration allows insurers to file claims on behalf of insureds.

11. Claim preclusion analogy rejected: Wong v. Cayetano

In rejecting permissive intervention, the court refused insurers’ attempt to import a “same transactional nucleus of facts” test from claim-preclusion doctrine (citing Wong v. Cayetano, 111 Hawaiʻi 462, 143 P.3d 1 (2006)) into HRCP Rule 24(b)(2)’s “common question of law or fact” standard.

B. The Court’s Legal Reasoning

1. The decisive move: settlement triggers exclusivity under HRS § 663-10

The opinion’s core reasoning is structural: HRS § 663-10 attaches when there is a “judgment or settlement” in “any civil action in tort.” Once the class settled, insurers’ remedy narrowed to what Maui Fires labels “exclusive”—a lien-based recovery mechanism.

2. No “subrogation revival” from class-member nonparticipation

The insurers’ theory depended on a practical administration fact: some class members may not file claim forms and thus receive no distribution. The court refused to translate that contingency into a doctrinal escape hatch. For subrogation purposes, the relevant event is that the insureds’ claims were resolved and class members became entitled to recovery through a binding settlement mechanism; non-filing does not undo settlement finality or recreate the right to sue the tortfeasor.

3. Protectable interest and impairment fail together

Intervention by right requires a “protectable interest” and a showing that disposition will “impair or impede” protection of that interest. Because the asserted interest (equitable subrogation post-settlement) does not exist, there is nothing to impair. The court used the Maui Fires maxim: “A right that does not exist cannot be prejudiced.”

4. Due process: insurers are not class members and do not get opt-out rights

The settlement excluded insurers from the class definition, and the court rejected the proposition that allowing insurers to submit claims on behalf of insureds transforms insurers into class members. The court treated subrogation as strictly derivative and refused to “shoehorn” insurers into a separate procedural status with independent opt-out rights.

5. Timeliness: knowledge of risk, not certainty of law

The court took a firm stance that timeliness is assessed from when a would-be intervenor knew or should have known their interests were at risk. Public disclosure of the settlement in November 2024—and insurers’ participation in negotiations—meant insurers were on notice then, not when the Supreme Court later clarified the law in March 2025. The court found significant prejudice in threatening to unwind or delay a large, carefully balanced global settlement providing urgently needed relief to fire victims and the community.

6. Permissive intervention properly denied

Even assuming arguendo some overlap in factual background (the fires), the court held permissive intervention was not warranted because insurers’ asserted equitable-subrogation theory did not share a proper “common question of law or fact” with the merits and fairness of the tort settlement under HRCP Rule 23, and intervention would cause undue delay and prejudice.

C. Impact

1. Clear rule for mass tort class settlements in Hawaiʻi

Burnes cements a practical, settlement-stabilizing proposition: insurers cannot use intervention to reintroduce equitable subrogation once a tort class settlement exists. The decision closes a potentially settlement-destabilizing gap—if “non-claimant” behavior could resurrect subrogation, defendants could never buy global peace through class settlements, and plaintiffs would face prolonged litigation risk and delay.

2. Reinforcement of HRS § 663-10 as the exclusive post-settlement recovery channel

The opinion strengthens the exclusivity message of Maui Fires: after settlement, insurers are confined to lien-based reimbursement, coupled with a limited “bad faith” check on settlement allocations (e.g., allocation gamesmanship between general and special damages).

3. Procedural posture signal: intervention must be early and necessity-based

The timeliness holding signals that insurers (and other would-be intervenors) cannot wait for appellate certainty or a more favorable procedural moment where intervention would be most disruptive. Public settlement milestones—and participation in negotiations—can start the clock.

IV. Complex Concepts Simplified

• Equitable subrogation: A judge-made doctrine allowing an insurer that paid an insured’s loss to “step into the insured’s shoes” and sue the tortfeasor. It is derivative: the insurer can claim no more than the insured could claim.
• HRS § 663-10 lien framework: A statutory mechanism that lets an insurer recover certain payments by asserting a lien against the insured’s tort recovery (typically tied to special damages like medical expenses), once there is a “judgment or settlement” in a tort action.
• Intervention by right (HRCP Rule 24(a)(2)): A nonparty may join a case only if they act timely and have a legally protectable interest that would be impaired, and the existing parties inadequately represent that interest.
• Permissive intervention (HRCP Rule 24(b)(2)): Even where there is some common question, the court may deny intervention to avoid undue delay or prejudice.
• Class settlement participation vs. claim filing: In a class action, a member who does not opt out is bound by the settlement. Filing a claim form is typically about receiving money from the fund—not about whether the member’s underlying legal claims were settled.
• General vs. special damages: “Special” damages are measurable economic losses (e.g., medical bills). “General” damages are non-economic (e.g., pain and suffering). Insurers’ lien rights typically track special damages; courts may police “bad faith” allocations designed to evade liens.

V. Conclusion

Burnes v. Hawaiian Electric Company, Inc. establishes (and operationalizes) a settlement-protective rule for Hawaiʻi mass-tort practice: once a tort class action settles, subrogating insurers have no protectable equitable-subrogation interest to justify intervention; their post-settlement recovery is confined to HRS § 663-10 liens, and “non-claiming” class members do not resurrect subrogation. The court also makes clear that insurers are not transformed into class members—and do not receive opt-out due process rights—by settlement provisions that allow administrative claim submission on behalf of insureds. Finally, the decision underscores that intervention must be timely and cannot be used as a late-stage lever that threatens to unravel a complex global settlement.